Archive

September 12, 2025
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HEW: Crystalising Policy Divergence

  • Spreads between ECB and Fed expectations widened again this week as the ECB held rates with a neutral bias while disappointing US labour market data drive dovish hopes.
  • Underlying US services inflation was soft, and initial jobless claims spiked, albeit over Labor Day. We think US pricing has gone too far, and political pressure won’t dominate.
  • Guidance with the Fed’s upcoming cut could start to correct that. The BoE will hold rates, after more hawkish macro news next week, and should trim its QT plan this year.

By Philip Rush

September 05, 2025
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HEW: Pauses On And Off

  • Another disappointing payroll release provides the fundamental cover needed for the Fed to end its pause with a rate cut on 17 September without being too political.
  • The BoE is starting its own pause, and if it goes a quarter without cutting, historically, it’s not resumed the cycle. Its DMP survey confirmed inflation’s persistent problem.
  • Another upside inflation surprise seems set to keep the ECB on hold amid record low unemployment. We also expect it to preserve its view that policy is in a good place.

By Philip Rush

August 29, 2025
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HEW: Policy Under Pressure

  • President Trump’s attempt to fire Governor Cook, potentially gaining a supportive majority on the Fed, raises the risk that US policy overstimulates the economy.
  • Policy peers should not be pressured to mirror mistakes. The ECB faces data that keep accumulating hawkish pressures, but others are more susceptible, like the BOK.
  • Non-farm payroll data provide the last hope of blocking a Fed rate cut in September. Meanwhile, a rise in EA inflation to 2.1% should help rule out another ECB rate cut.

By Philip Rush

August 22, 2025
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HEW: Dovish Bias Dominates

  • The evidential hurdle formally shifted in support of a Fed rate cut in September. Still, the data may yet discourage it, or embolden the market to price it as mistaken.
  • Flash PMIs broadly reinforced the resilience narrative, while another upside UK inflation surprise sets the BoE up to resist cutting amid persistently excessive expectations.
  • A quieter, bank holiday-shortened week leaves the BOK and BSP decisions as monetary policy highlights. Euro area M3 and some national flash HICP prints are our data focus.

By Philip Rush

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